I've cut and paste this article from the Guardian Unlimited. I shall be penning a response.

The Internet is allowing unsigned authors to publish books affordably, while keeping old titles alive, writes Victor Keegan. Thursday March 2, 2006
Everyone thought Amazon would kill off the second hand book trade. As it happens, bookshops around the world have found a new lease of life through the admirable abebooks.com, which links them together enabling readers to find a forgotten book gathering dust in a shop half way round the earth.
Now the internet is in the throes of giving another huge boost to books through a combination of self-publishing web sites, which are sprouting up all over the place, and the explosive potential of print-on-demand (POD).
Self-publishing enables anyone to upload a book in digital form to a website, which then formats it complete with a cover. It costs anything from £4.50 (single proof of one book) to more than £500 for full personalised involvement of the publishing house at all stages, from starting up to getting a link to Amazon.
Print on demand enables unsigned authors to publish their books without having to pay for the first 500 or 1,000 copies, as they are simply downloaded from a data base to be printed copy by copy as required. This is leading to an unexpected growth area - the re-publishing of out-of-print books going back for centuries. Whoever thought that the new technology of the internet would lead to a revival of one of the world's oldest industries?
After I had written a column about my own attempts to publish a book, I received invitations to visit two companies whose existence I had been unaware of. One claims to be the world's biggest print-on-demand company, while the other says it is one of the largest self-publishers. Both are subsidiaries of US firms and, curiously, both are based in Milton Keynes, where I went to visit one this week.
Two statistics spell out the potential: 50% of all published books with an ISBN (International Standard Book Number) tag sell fewer than 250 copies and barely more than 1% of manuscripts submitted ever get published. David Taylor, managing director of Lightning Source, says that his company expanded its POD activities by more than 60% in volume in 2005 and is expected to grow by 50% this year. Demand is coming from the likes of Amazon, Google, content aggregators that scan out-of-copyright books, self-publishers and traditional publishers. All are beginning to realise that there is an alternative to having large warehouses full of unsold books.
On the day I visited, Lightning printed several thousand books, mostly single copies for customers ranging from Cambridge University Press to individuals at a cost of 70p for a cover and 1p a page for a softback. Over the year they expect to print 1.4m books. POD is no good for printing Harry Potter because traditional economies of scale are not available, but it is profitable for all concerned when printing a single copy or batches of up to 750 copies.
"It turns the traditional economics of publishing on its head," says Taylor, who adds that self-publishing needs POD in order to succeed. He reckons that self-publishing is happening in the UK below the radar of the traditional UK publishing industry, but is still probably two or three years behind the US in terms of development probably because no single strong, well-resourced company has emerged.
The arrival of Amazon has added another dimension because self-publishing companies will organise a link to Amazon for an author's book so that when people search for a subject in a search engine such as Google, books related to that search appear in the results. Suddenly, authors have an automatic marketing strategy as well as access to cheap printing. As a result, digitisation is making more - not fewer - books available and facsimiles of any book ever published that still survives could be available to buy.
Self-publishing companies are offering all sorts of packages for the budding author. Lulu.com charges about £3.60 for the first proof copy, as long as you have done it on your own, complete with colour cover, after which you pay for add-ons. The likes of selfpublishing.co.uk (£495) and authorhouse.com (£525) offer a bespoke service with personal advice on publishing and design during the processing period and include obtaining ISBN numbers and other services.
Authorhouse claims to be the biggest self-publisher in the US by number of titles, printing and selling more than one million books a year. Patrick Dunnigan, the UK manager, says the business is based on personal attention and appears unconcerned by cheaper rivals.
The economics work roughly like this: a typical 108-page book measuring six by nine inches might have a basic price of £4 if sold from authorhouse's site. The price rises to £7.99 via Amazon, which takes half, leaving less for the author than selling through the authorhouse site after the publishing company takes its cut as well.
It is clear that both the POD and self-publishing industries will continue to enjoy very strong growth in the immediate years ahead. The only question is whether it will be, as looks likely, a boom enjoyed by US companies rather than British firms.